In its April 29, 2013 opinion, the US Court of Appeals for the Fourth Circuit in The Country Vintner of North Carolina, LLC v. E. & J. Gallo Winery, Inc. held that a prevailing party's recovery of e-discovery costs under 28 U.S.C. § 1920(4) may include only the actual copying of electronically stored information (ESI), not the costs of processing ESI.

After prevailing on all of the claims against it, defendant E.& J. Gallo Winery, Inc. (Gallo) filed a bill of costs seeking over $100,000 for six categories of expenses relating to electronic discovery. Gallo sought reimbursement for:

The district court awarded Gallo only about $219. Section 1920(4) allows a prevailing party to recover "[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." The district court reasoned that the only costs incurred by Gallo for copying files were for the conversion of native files to TIFF and PDF formats and the transfer of files onto CDs. The district court also concluded that none of Gallo’s ESI costs qualified as "exemplification."

The Fourth Circuit affirmed. It first found that "making copies" in 28 U.S.C. § 1920(4) referred to "producing imitations or reproductions of original works," and nothing else. Adopting the US Court of Appeals for the Third Circuit's reasoning in Race Tires America, Inc. v. Hoosier Racing Tire Corp., the Fourth Circuit held that activities leading up to the production of copies were not included in Section 1920(4)'s "making copies" and that the ESI discovery process is not radically different from the process pre-ESI.

Second, the Fourth Circuit rejected Gallo's argument that its ESI processing charges qualified as "exemplification" under 28 U.S.C. § 1920(4). The Fourth Circuit noted a circuit split between the US Courts of Appeals for the Federal and Sixth Circuits, and the Seventh Circuit over the interpretation of "exemplification." However, since Gallo's ESI processing charges were not authentication of public records, exhibits or demonstrative aids, the Fourth Circuit held, they could not be "exemplification" fees under either view.

The Fourth Circuit's decision in The Country Vintner of North Carolina, LLC v. E. & J. Gallo Winery, Inc. teaches that counsel planning e-discovery should take into account that many ESI-related costs may not be awarded later even if their client prevails. Under 28 U.S.C. § 1920(4), "making copies" and "exemplification" are limited terms, not encompassing all costs related to these activities.